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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
(Amendment No. 2)
Under the Securities Exchange Act of 1934
MESA Inc.
__________________
(Name of issuer)
Common Stock, $.01 Par Value
________________________________
(Title of class of securities)
590911103
________________
(CUSIP number)
Dennis R. Washington Marvin Davis
c/o Washington Corporations Davis Companies
101 International Way 2121 Avenue of the Stars, Suite 2800
Missoula, Montana 59807 Los Angeles, California 90067
(406) 523-1300 (310) 551-1470
David H. Batchelder Dorn Parkinson
Batchelder & Partners, Inc. c/o Washington Corporations
4330 La Jolla Village Drive, Suite 200 101 International Way
San Diego, California 92122 Missoula, Montana 59807
(619) 456-6655 (406) 523-1300
________________________________________________________
(Name, address and telephone number of person
authorized to receive notices and communications)
Copy to:
Scott R. Haber Kendall R. Bishop
Latham & Watkins O'Melveny & Myers
505 Montgomery Street, Suite 1900 1999 Avenue of the Stars, 7th Floor
San Francisco, California 94111 Los Angeles, California 90067
(415) 391-0600 (310) 553-6700
July 11, 1995
_________________________________________________________
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
Check the following box if a fee is being paid with the statement: [ ]
Page 1 of 11 Pages
Exhibit Index is on Page 5
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This Amendment No. 2 to Schedule 13D is being filed on behalf of the
undersigned Reporting Persons to amend the Schedule 13D filed June 29, 1995, as
amended (the "Schedule 13D"), relating to the common stock, par value $.01 per
share (the "Shares"), of MESA Inc., a Texas corporation (the "Company"). Unless
otherwise indicated, all capitalized terms used herein but not defined herein
shall have the same meanings as set forth in the Schedule 13D.
Item 4. Purpose of Transaction.
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Item 4 to the Schedule 13D is hereby amended, in pertinent part, as
follows:
On July 11, 1995, David Batchelder and Dorn Parkinson sent a letter to
the Board of Directors of the Company regarding management's proposal that the
Board of Directors authorize Lehman Brothers to work with management to seek
indications of interest from potential buyers or merger partners. The letter
also expressed concern over statements made by the Company's Chairman concerning
"merger and sell-out possibilities" and a possible restructuring of the Company.
The letter further discussed issues related to the Company's "poison
pill" Rights Plan adopted on July 6, 1995. The "poison pill" contains provisions
which, under certain circumstances, could allow the Company's stockholders,
other than a person or group of persons who beneficially own more than 10% of
the Shares, to purchase Shares at half price. The effect of this device would be
to substantially dilute the holdings of the person or group of persons who
beneficially own more than 10% of the Shares. The Reporting Persons currently
hold an aggregate of 9.4% of the outstanding Shares.
Pursuant to the Company's Articles of Incorporation and Bylaws,
holders of 20% of the outstanding Shares have the right to request the Company
to call a special meeting of stockholders. Company counsel has orally informed
the Reporting Persons that by virtue of making such a request, stockholders who
request the Company to call a special meeting of stockholders would be deemed to
have acquired beneficial ownership of more than 10% of the Shares under the
"poison pill," unless the requests are obtained through a public proxy or
consent solicitation. If Company counsel were correct, the "poison pill" would
adversely affect the ability of stockholders to exercise their right to request
a special meeting. The Reporting Persons have previously announced their
intention to seek to call a special meeting of shareholders for the purpose of
electing a majority of directors who would be committed to exploring all
alternatives for maximizing shareholder value.
A copy of the July 11, 1995 letter is filed herewith as Exhibit 2 and
is incorporated herein by reference.
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Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
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Item 6 to the Schedule 13D is hereby amended, in pertinent part, as
follows:
As previously reported in the Schedule 13D, Batchelder & Partners,
Inc. ("BPI") has entered into an agreement with Dennis Washington under which
BPI would have the right to receive a percentage of the profits realized by Mr.
Washington on his investment in the Company's securities through December 31,
1995. On July 11, 1995 that agreement was amended to extend the date to
December 31, 1996.
As previously reported in the Schedule 13D, BPI has entered into an
agreement with Davis Companies under which BPI would have the right to receive a
percentage of the profits realized by Davis Companies and its affiliates on
their investments in the Company's securities through December 31, 1995. On
July 11, 1995 that agreement was amended to extend the date to December 31,
1996.
A copy of each amendment referred to in this Item 6 is attached hereto
as Exhibits 3 and 4, respectively, and is incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
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Exhibit 1 Joint Filing Agreement (incorporated by reference to the Schedule 13D
filed June 29, 1995)
Exhibit 2 Letter dated July 11, 1995 from David Batchelder and Dorn Parkinson to
the Directors of MESA Inc.
Exhibit 3 Letter Agreement dated July 11, 1995 between Batchelder & Partners,
Inc. and Dennis R. Washington
Exhibit 4 Letter Agreement dated July 11, 1995 between Batchelder & Partners,
Inc. and Davis Companies
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SIGNATURE
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After reasonable inquiry and to the best of each of the undersigned's
knowledge and belief, each of the undersigned certifies that the information set
forth in this statement is true, complete and correct.
Dated: July 12, 1995
/s/ Dennis R. Washington
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Dennis R. Washington
/s/ David H. Batchelder
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David H. Batchelder
/s/ Dorn Parkinson
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Dorn Parkinson
Davis Acquisition, L.P.
By: Davis Companies
Its: General Partner
By: /s/ Marvin Davis
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Name: Marvin Davis
Its: President
Davis Companies
By: /s/ Marvin Davis
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Name: Marvin Davis
Its: President
Marvin and Barbara Davis
Revocable Trust
By: /s/ Marvin Davis
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Name: Marvin Davis
Its: Trustee
/s/ Marvin Davis
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Marvin Davis
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EXHIBIT INDEX
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Exhibit 1 Joint Filing Agreement (incorporated by
reference to the Schedule 13D filed June 29,
1995)
Exhibit 2 Letter dated July 11, 1995 from David
Batchelder and Dorn Parkinson to the
Directors of MESA Inc.
Exhibit 3 Letter Agreement dated July 11, 1995 between
Batchelder & Partners, Inc. and Dennis R.
Washington
Exhibit 4 Letter Agreement dated July 11, 1995 between
Batchelder & Partners, Inc. and Davis
Companies
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EXHIBIT 2
July 11, 1995
Board of Directors
MESA Inc.
1400 Williams Square West
5205 N. O'Connor Boulevard
Irvine, Texas 75039-3746
Dear Fellow Directors of MESA Inc.:
We are writing you to express concern regarding a number of issues related
to the Board of Directors meeting held on Thursday, July 6, 1995. During the
meeting management presented the Board with a proposal to authorize management
and Lehman Brothers to begin soliciting proposals for the purchase of all of
MESA's assets, operations and liabilities, as well as for the Hugoton Field
segment, from a large group of qualified buyers and merger candidates. The only
written material which was provided in support of the proposal was a brief 5-
page summary by Lehman Brothers. We believe this analysis is woefully
inadequate and did not provide a proper foundation on which the Board could have
made an informed decision. We offer the following points for your
consideration:
1. Lehman Brothers should not just review alternatives presented to the
Company, but should actively develop alternatives for the Board's
consideration that are designed to maximize shareholder value;
2. Lehman Brothers should analyze the alternatives and provide the Board
with an indication of the potential range of values for each alternative.
The alternatives should include, among others, a sale of the Company for
cash, a merger of the Company, a recapitalization involving an equity
infusion, and combinations thereof combined with partial asset sales. This
analysis should also include the estimated costs associated with
refinancings and other actions that would accompany each of the
alternatives; and
3. Lehman Brothers should provide the Board with a list of potential
interested parties to be contacted with respect to each of the
alternatives.
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As discussed at the meeting, the Board should be kept fully informed of
contacts made and received with an update and status report prepared weekly by
the Lehman Brothers. The process followed by the Board should be exhaustively
documented in light of the intense scrutiny by our shareholders and the recent
purported class action litigation filed against the Company and certain of its
Directors. As agreed to at the meeting, the Board should approve the fee
arrangements with Lehman Brothers.
As you know, on June 26, 1995, the Wall Street Journal published a letter
from Boone Pickens as Chairman and CEO of MESA which contained the following
statement:
"While David is quoted advocating that MESA begin a review of merger
or sell-out possibilities, MESA's Board rejected that proposal."
This statement by the Chairman of the Board remains uncorrected in the
public record and creates the impression that the Board has already dismissed
the alternatives that the Company now says will be reviewed. We believe that it
is incumbent upon the Board to promptly correct this false and misleading
statement by issuance of a public press release to the effect that the Board had
not, in fact, voted on such matters until July 6, 1995, at which time the Board
approved the review of all alternatives including a sale of the Company or
merger or the other business combination.
On July 7, the day following the meeting in which the Board approved a
review of all alternatives, the Chairman is quoted by Reuter's as follows:
"If he is able to complete the restructuring, Pickens said he looks
forward to running MESA as a trimmed down exploration and production
company. MESA has surveyed eight wells in the Gulf of Mexico since
June, where it controls 200,000 acres. The Company also has
identified a hundred potential drilling locations in its West
Panhandle Field, he said. "We'd be up and running real quick" he
said."
This statement is a continuation of a pattern designed to undermine the
process approved by the Board. By touting this one alternative, the Chairman
sends a discouraging message to potential buyers and merger partners, as well as
to our stockholders; namely, that the Chairman has a clear bias against
transactions involving a change in control and that the Company is favoring one
particular alternative and is not prepared to fairly consider all alternatives.
This message is certain to have a chilling effect on potential buyers and merger
partners. We urge the Board to assert control over the process to ensure the
Company's shareholders a full and fair review of all alternatives for maximizing
shareholder value. The Board's fiduciary obligations in this regard are
heightened by the lack of an independent committee of the Board, with
independent legal and financial advisors, to conduct such oversight.
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Since we did not have an opportunity to review the shareholder rights plan
prior to the meeting, our comments are still preliminary. In order to properly
assess the impact of the "poison pill", we request the following additional
data:
1. With respect to the requirement that any cash offer be fully
financed, an analysis by Lehman Brothers of the likely cost of
obtaining such financing commitments and a review of the percentage of
cash tender offers in non-negotiated transactions during the last 5
years that were, in fact, fully financed through the payment of
commitment fees. Lehman's analysis should include an affirmative
statement as to whether inclusion of this provision is more likely
than not to promote the bidding process and result in a higher value
being received by all shareholders;
2. With respect to the 75% threshold requirement in order for an
offer to be a "Permitted Offer," an analysis by Lehman Brothers of the
practical application of this exception considering the impact of
existing ownership by "continuing directors." For example, since the
Board beneficially owns 12.2% of the stock, a bidder would be required
to purchase over 85% of all other shares in order to meet this test;
3. With respect to the definition of "Acquiring Person", since the
Board already owns 12.2% of the stock, does the poison pill limit the
ability of existing directors to purchase additional shares
individually or as a group?
4. With respect to the definition of "Beneficial Owner", an analysis
by Baker & Botts of (i) the precedent for including within the
definition of beneficial ownership proxies given pursuant to a
solicitation exempted by the Exchange Act; (ii) similar provisions in
any poison pills adopted during the last 5 years; and (iii) the effect
---
of the poison pill on a shareholder's ability to call a special
meeting of shareholders (timing, cost, etc.);
5. An analysis of the cost of adopting the poison pill, including the
fees for the Company's lawyers, financial advisors and the rights
agent, and printing and mailing costs; and
6. Copies of all correspondence with the New York Stock Exchange and
the Securities and Exchange Commission regarding the poison pill and a
copy of the legal opinion prepared by Baker & Botts which we assume
was delivered to the Company regarding the poison pill.
We believe that once these additional analyses are presented, the Board
will find that the Company's poison pill is unreasonable in a number of material
respects and may, in fact, deter the development of alternatives to maximize
shareholder value. We request that the Board reconvene as proposed by the
Chairman and counsel to the Company to further discuss (i) the additional
analyses to be provided by Lehman Brothers, management and legal counsel; (ii)
the Chairman's public statements regarding the Board's deliberations and
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process; and (iii) the provisions of the poison pill. As fiduciaries, we must
each be concerned with our legal liability as Directors and be assured that we
are making informed business judgements on behalf of all the shareholders.
Yours Truly,
/s/ David H. Batchelder
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David H. Batchelder
/s/ Dorn Parkinson
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Dorn Parkinson
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EXHIBIT 3
Batchelder & Partners, Inc.
4330 La Jolla Village Drive, Suite 200
San Diego, California 92122
David H. Batchelder
President
July 11, 1995
Mr. Dennis Washington
101 International Way
Missoula, Montana 59802
Dear Dennis:
This letter is in reference to the Letter Agreement dated July 29, 1994, as
amended, between you and Batchelder & Partners, Inc. This will confirm our
agreement that such Letter Agreement is hereby amended to change all references
to "December 31, 1995" to "December 31, 1996."
Very truly yours,
BATCHELDER & PARTNERS, INC.
/s/ David H. Batchelder
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By: David H. Batchelder, President
Agreed and Accepted:
/s/ Dennis Washington
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Dennis Washington
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EXHIBIT 4
Batchelder & Partners, Inc.
4330 La Jolla Village Drive, Suite 200
San Diego, California 92122
David H. Batchelder
President
July 11, 1995
Mr. John Davis
Davis Companies
2121 Avenue of the Stars
Suite 2900
Los Angeles, California 90067
Dear John:
This letter is in reference to the Letter Agreement dated July 18, 1994, as
amended, between Davis Companies and Batchelder & Partners, Inc. This will
confirm our agreement that such Letter Agreement is hereby amended to change all
references to "December 31, 1995" to "December 31, 1996."
Very truly yours,
BATCHELDER & PARTNERS, INC.
/s/ David H. Batchelder
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By: David H. Batchelder, President
Agreed and Accepted:
DAVIS COMPANIES
/s/ John Davis
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John Davis, Vice President
